Greed is no longer good – bond boom comes to an end

City bond traders have put the champagne on ice. They had a good run. For some it lasted almost a year. But it’s over now and the “new normal” of low trading volumes and weak profits is reasserting itself.

On Wall Street, Goldman Sachs took the biggest hit. This week the firm reported profits had plunged 40% in the second quarter on its bond, currency and commodities trading desks.

All the other big names in the US investment banking world saw bond trading profits dive in the three months to the end of June, save for age-old Goldman rival Morgan Stanley, which restricted the loss to 4%.

Lloyd Blankfein, the Goldman boss who rose through the ranks of bond traders to the top job, was unlikely to be sanguine about the turn of events amid concerns that his bank suffered more than most for relying on out-of-favour hedge funds as clients.

Back in October 2016 the story was very different. Barclays was on a high after what it said was a summer bonanza for its bond traders, pushing quarterly profits to a two-year high. Likewise Goldman, Deutsche Bank, Bank of America and JPMorgan were raking in the trades.